Liontrust European Growth Fund

July 2018 review

The Fund returned 3.4%* in sterling terms in July, compared with the 5.0% return from the MSCI Europe ex-UK index.


Inevitably, trade war news was ever-present on front pages throughout July. President Trump imposed a tariff on US$34bn worth of Chinese imports, to which China retaliated with levies of its own. Throughout the month Trump signalled that he is willing to impose tariffs on up to US$500bn of Chinese goods.


However, the developments in the relationship between the US and Europe were more positive. Trump met with President of the European Commission Jean-Claude Junker late in the month and the pair reached an agreement to cease any further escalation of trade barriers and work to reducing the tariffs already in place. This meant the US would refrain from imposing duties on European car makers, which helped lift share prices in the auto sector. Peugeot (+26.8%) was one of the Fund’s holdings to benefit from this. Additionally, the company’s H1 results included much better than expected growth in revenue and EBIT (earnings before interest and taxes). This reflected a strong volume and mix performance as well as some cost improvements and a faster than expected turnaround at Opel-Vauxhall.


Away from trade wars, economic growth in the eurozone slowed to a quarterly rate of 0.3% according to the first estimate of Q2 GDP, compared to 0.4% in the first quarter. While the rate was below expectations, it is unlikely that it will derail the European Central Bank’s plans to end quantitative easing. 


The performance of the MSCI Europe ex-UK Index was once again led by defensive sectors, with health care (+7.7%) and utilities (+6.1%) among the best performers in sterling terms along with financials (+6.2%). The biggest laggards were real estate (+0.9%), IT (+2.6%) and consumer discretionary (+3.1%).


Scandic Hotels Group (+21.8%) and Siltronic (+22.6%) were both among the Fund’s best performers following the release of interim results. Hotel operator Scandic saw second quarter net sales increase by 26% year-on-year to SEK4.75bn, which was ahead of the SEK4.61bn consensus forecast. This was driven by the group’s Restel acquisition in January and other hotel openings. Semiconductor company Siltronic said high demand for wafers boosted sales by 27% year-on-year in the first six months of the year while gross profit doubled. The group slightly lifted its forecasts for the full year on the back of this.


Interim results were also behind the share price moves of the portfolio’s worst performing stocks. Mining and metallurgical group ERAMET (-24.1%) reported a modest rise in sales but margins in its manganese division were squeezed as a result of lower manganese alloy prices. Cash handling company Loomis (-9.3%) also saw a decline in margins as a result of higher costs in relation to restructuring programmes in France and Sweden. Operating income in the second quarter declined 1.5%.

Stora Enso’s (-15.0%) results missed expectations partly due to tight wood supply in the Nordics, which contributed to higher variable costs. The paper and packaging company stated that the short supply of wood is expected to cost the company €10m in the third quarter, meaning Ebit is expected to be similar to levels seen in the second quarter.


Positive contributors to performance included:

Peugeot (+26.8%), Siltronic (+22.6%) and Scandic Hotels Group (+21.8%).


Negative contributors to performance included:

ERAMET (-24.1%), Stora Enso (-15.0%) and Loomis (-9.3%).

Discrete years' performance** (%), to previous quarter-end:







Liontrust European Growth I Inc






MSCI Europe ex UK






IA Europe Excluding UK













*Source: Financial Express, as at 31.07.2018, total return (net of fees and income reinvested), bid-to-bid, institutional class.


**Source: Financial Express, as at 30.06.2018, total return (net of fees and income reinvested), bid-to-bid, primary class.


For a comprehensive list of common financial words and terms, see our glossary here.


Key Risks 

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in Funds managed by the Macro Thematic team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Fund’s expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. The performance of the Liontrust GF Macro Equity Income Fund may differ from the performance of the Liontrust Macro Equity Income Fund and is likely to be lower than its corresponding Master Fund due to additional fees and expenses.



The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing. 

Monday, August 13, 2018, 9:42 AM